As condo vacancies rise, rents could fall for tenants

The price difference between Housing Board units and condominiums has been reduced significantly. HDB rents are stable or even at new highs. Meanwhile, private unit rentals have been declining for the last six months. This has caused a discrepancy to occur in the market performance for both housing types.

If these trends persist, renting private homes may become more attractive to tenants than renting HDB flats, particularly if they are willing make compromises on space in return for the extra privacy that a privately owned home can provide.

Tenants might change their priorities or preferences in the near future. Landlords need to adjust their strategy based on market changes. This could help them reduce the risk associated with prolonged vacancy.

The rental market in private homes has slowed rapidly. More landlords are now willing to accept lower rentals to avoid having their units empty. It is quite different from two years back, when there were more than 20 viewings a day for a unit and homes could be sold within a few days. Currently, it could take between two and three months to lease a house. Many older, poorly maintained houses remain vacant for up to six months.

Rents are down due to a higher supply of private property, with over 29,000 homes completed in the years 2022 and 2023. This was made worse by the sharp decline in domestic demand, as many locals opted to leave the leasing market when they moved into new homes. Expat demand is also down, which has exacerbated the problems, since multinational corporations, tech companies, start-ups, financial institutions and other firms have all been reorganizing over the last 12 months.

Data from the Urban Redevelopment Authority indicates that, after reaching a peak in the third-quarter of 2023 the median monthly rents for condominiums are now on a downward trend. They have dropped from $4.550 in the third-quarter of 2023 to $4.500 by the fourth-quarter of 2023 to $4.300 during the first and second months of 2024.

The most dramatic decline in private condominium rents occurred in the prime central region (CCR), where prices fell by 5.6% from the third-quarter of 2023 to first-two months of 2020. Next came the suburbs, also known as the outside of central regions (OCR), which fell by 5.6 per cent between the third quarter of 2023 and the first two months of 2024.

Some districts have seen a greater drop in the median rental price of condos than others. District 5 in Pasir Panjang (Hong Leong Garden, Clementi New Town), experienced a drop of almost 10%, going from $4,600 at the end of the third quarter of 2020 to $4,100 by January to February of 2024. District 13 (Macpherson & Braddell), saw rents drop by 9.1 percent, while the median rent in District 18 (Tampines and Pasir Ris), and District 4 (Telok Blangah & Harbourfront) fell by 7.7 per cent.

District 10 (Ardmore, Bukit Timah, Holland Road, Tanglin) was the area that saw the largest fall, dropping from $6.900 down to $6.425.

HDB rentals are showing a different pattern than private rentals. According to’s estimates, HDB rental rates are gradually rising and reaching an all-time-high in February 2024.

Median rental prices for flats with three rooms rose by the most in 2024’s first two months, with an increase of 12 per cent compared to last year. HDB data shows that rental growth was also 10 per cent in four-rooms flats. Executive flats grew by 9.1 percent, five-rooms flats grew by 5.5 percent, and two-rooms flats grew by 4.5 percent.

Two HDB flats rented for $7,000 or more per month. The five-room apartment at Tanjong Pagar Plaza in the central area commanded the highest rent, $7,600, for November 2023. In September of 2023, the rent for a Geylang apartment with five rooms in Pine Close was $7,400.

These findings indicate that the HDB rentals market is steadily growing, and rents in certain areas have risen to new heights. This is in part due to a high demand for HDB properties and a limited stock. HDB apartments are still affordable compared to private houses, where rents have increased due inflationary pressures and higher taxes.

Pinetree Hill showflat location

There are also fewer HDB flats available for rent, as a result of the decline in the number that meet their five-year MOP requirement. MOP flats, in particular, fell from 30920 in 2020 to 15549 in 2030.

The price difference between HDB and condos for rent has narrowed. There may be more tenants moving back to condos. This could pave the path for a gradual recovery in private rent.

In 2024, even though overall rents were at record highs in 2018, the number of units leased at these higher prices decreased. This means that HDB flats are being rented out at higher prices by fewer people.

For instance, 157 flats leased monthly for at least $4.500 were in the first half of 2023. But only 114 units in the second half of 2024. Over the same period of time, the number if flats leased monthly for a rent at least $5,000 dropped from 60 to just 21.

The gap in rental prices between HDB and condos has narrowed. In the third trimester of 2023, HDB flats had a median monthly rental price of $3,100. The median monthly rent was around $4,550. During the first two months in 2024, however, the difference between HDB and private flats decreased to $1200.

Depending on the competitiveness of private rents, tenants may opt for smaller apartments in the suburbs. Based on the transactions of the first 2 months of 2024 in the suburbs, the median monthly rental for a 2-bedroom condo was approximately $3,600. That is comparable with the monthly rental for a 5-room or executive flat which ranges between $3,500 and $3,600.

For tenants who need a three-bedroom apartment, smaller units measuring 800 sq ft – 1,200 sq.ft can be rented for less than $4,000 between January and Febraury 2024. You can find such units in District 26 – Upper Thomson, Springleaf – District 17 – Loyang – Changi – District 28 – Seletar – District 23 — Hillview, Dairy Farm – Bukit Panjang & Chua Chu Kang and District 27 Yishun & Sembawang.

Tenant behavior may shift as the difference in price between HDB rentals and private rents shrinks. Some may choose to move back to the private sector, while other may opt to move from the outskirts of the city to prime locations.

HDB may feel some downward pressure as a result of the impending competitive market. Even so, the price correction will be minimal due to the low supply of MOP, which is estimated to reach 11,952 units before year end.

It is anticipated that the demand for larger flats will remain strong, due to the relaxation on the occupancy limit for such units. Now up to eight people from different families can reside in one apartment.

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